“If my employer aborts my relocation, do I still have to reimburse it if I leave?”

Question: I have worked for a bank in Austin, Texas (my hometown) for five years. A year ago they offered me a promotion that involved relocation to New York City, which I jumped on. In April, 2011 I signed the bank’s standard “Relocation Expense Reimbursement Agreement.” It covers actual costs of relocation, including any stays in hotels.

The Relocation Expense Reimbursement Agreement provides that if I voluntarily leave working for the bank before 24 months, I have to reimburse them 100% if I leave within 12 months of the relocation, and 50% if I leave after 12 months, but before 24 months, that is, to April, 2013.  

I moved to New York and was there for several weeks, living in a hotel, which cost almost $15,000, when the bank decided that it would rather have me relocate to Idaho. So, in November, 2011 for the move from New York to Idaho I was required to sign a second Relocation Expense Reimbursement Agreement, this one lasting to November, 2013.

So, here I sit with two signed Relocation Expense Reimbursement Agreements, and two very expensive relocation bills. When I recently spoke to my Human Resources representative, she told me, “Both agreements remain in force.” She agreed to elevate the question to the Head of HR, and came back with the same response.

Can this be? If I decide this bank is not for me, do I really have to pay the bank back for both moves?

Austin, Texas

Answer: Dear Shannon: What you describe is an example of “The agreement made sense originally, but doesn’t make sense now.” What you are really faced with is a circumstance that no one thought about when the agreement was written and signed.            

1. By the precise words of your two Relocation Expense Reimbursement Agreements, you will owe the monies for both agreements if you leave. If anyone reads your first repayment agreement, and then hears that you left the bank, they would say, “A simple reading of the agreement says you owe the bank the reimbursement.” However, we do not read agreements in a vacuum; rather, we read agreements taking into account other circumstances, especially new circumstances. And when those new circumstances came about by the decision of one of the parties, the other party is usually excused from his or her “performance.”      

2. However, a very good argument exists that, while there was no “expressed” provision that said “If the bank has you move away from New York, you don’t have to repay,” there was nonetheless such an “implied” provision in your reimbursement agreement. It is implied in every agreement, whether or not related to employment, that if one party materially changes the circumstances making the other party’s “performance” difficult, if not impossible, that may “forgive” the other party’s performance.

Let me give you a made-up example: Bob and Joe agree that Bob will paint Joe’s car blue for $100 by Tuesday, or pay a penalty of $50 per day for the delay. On Monday, Joe drives his car to an unknown location, and won’t tell Bob where it is. Surely Bob is excused from the penalty, because Joe acted on his own to make performance impossible. 

From my experience with agreements, and employment agreements, in particular, I believe there was implied in your Relocation Expense Reimbursement Agreement a clause that should have said: “If the bank moves you away from New York for its own purposes, you will not have to reimburse the bank for its moving you there in the first place.” It’s just that neither you nor the bank thought of that possible circumstance when it was given to you to sign.

3. Because the bank aborted your relocation, and moved you away from New York for its own purposes, common sense dictates that the agreement does not cover that situation, and therefore does not require you to repay those monies. Shannon, I have reviewed and negotiated many relocation reimbursement agreements over the past 30 years. I don’t think I ever thought to put such a provision into one, and I can’t fault you or the bank for not catching that possible circumstance, either. It’s my expectation that the first of the two Relocation Expense Reimbursement Agreements you signed would not be enforceable for this very reason.

4. Why not reach out – in writing – either to the Head of HR, or even to the Bank CEO, for a confirmation of my common-sense belief that the first reimbursement agreement is not effective. Frankly, I think you are dealing with a lower-level HR representative who is uncertain of what to do, so she is not doing anything. In a respectful email, I suggest you reach out to the Head of HR, yourself, or perhaps even the Bank’s CEO, for confirmation that the first agreement is not going to be held against you. Though it is “going over the head” of someone, I think it is entirely justified and reasonable that you do so.

5. It seems the bank wants to keep you; if so, they would likely want to keep you feeling that you’re being treated fairly, too. Being chosen for promotions and relocation is a sign you are viewed as a valuable employee. A Relocation Expense Reimbursement Agreement is meant only to prevent the bank from investing in you, and not being able to enjoy the return on its investment. Your move to New York was the bank’s decision, and apparently the bank’s mistake, and should not be something that you are held accountable for. I am fairly confident that you’ll find the bank actually agrees with that, even if it means going to the Head of HR, the CEO, or perhaps even the Board of Directors. Common sense almost always wins out.

6. That said, you may end up needing the assistance of an attorney. I do expect you will be successful by the “informal” approach above. If that does not work, you may need to have an attorney assist you in correcting this problem.

You can locate an experienced employment attorney from the Legal Services section of our blogsite by simply [clicking here.]

Shannon, I suggest you be proactive, and go “higher up” to get peace of mind on this issue. You surely deserve it. I hope you will let us know how your attempt to do that meets with  success.                                                                                                 

Al Sklover

If you agreed to repay your former employer (a) tuition reimbursement, (b) relocation expenses, (c) a sign-on bonus, or even (d) a short-term loan, you may be able to have that obligation waived and forgiven. To obtain a copy of our Model Memo entitled “Model Letter for Repayment Obligation Forgiveness – with 18 Great Reasons,” just [click here.] “What to Say, and How to Say It.™” – Delivered by Email – Instantly!

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© 2011 Alan L. Sklover, All Rights Reserved.

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